NetEase (NTES, Financial) recently released pretty impressive financial results. It reported a solid 42.3% growth in revenue, which is a clear indicator of the healthy growth in the mobile gaming platform. Besides this, mobile internet is also playing a major role in driving NetEase's internet market. NetEase is largely focusing on bringing new and exciting games on the mobile platform, along with expansion packs to attract more gamers.
Looking ahead
Having delivered solid results in the fourth quarter, NetEase is striding to broaden its scope of internet service with advancement in its business across various platforms. For this, the company is now focusing on various initiatives to improve its market presence. This seems smooth for NetEase in the future, having seen a solid 35.7% increase in its online gaming service. It is now focusing on adding value to its self-developed games and licensed online games to attract more gamers which will strengthen its financial performance as well as market presence.
For 2015, NetEase seems well positioned. It is focusing on its product pipeline and putting efforts to make it more attractive. It is working on bringing new games across the online gaming platform such as Revelations, its 3D oriental Fantasy MMORPG. Furthermore, NetEase is pleased to see positive results from the Beta testing for Hegemon-King of Western Chu. The company has great expectations for this game in 2015.
Under one of its strategic initiatives, NetEase is also working closely with Blizzard which is an established gaming company to bring more exciting gaming content across the platform. Moreover, with the growing appetite for mobile capabilities in China, NetEase is also planning to bring in mobile versions of popular PC games which will help it to attract more gamers to its games.
Mobile gaming prospects for 2015
Mobile gaming platform is definitely a booming platform, and it has grown at a rapid pace in past 10 years. The trends are positive and are expected to improve further in the coming years. With the growing usage of Android platform in the mobile phones, the experts in the mobile gaming are expecting this to have a positive impact on overall mobile gaming industry in 2015.
According to the latest studies, Google (GOOG, Financial) Play’s worldwide revenue is generated primarily by the gaming apps and as the number of smartphones increase, it is expected to drive mobile gaming even higher. Further, according to the research carried out by IBIS World: the value added for Online Gaming industry in China is expected to grow at an annualized rate of 21.3% over 10 years to 2019. All of these signs indicate a healthy mobile gaming platform in the coming years.
Conclusion
Moving to the fundamentals, the stock looks cheap with a trailing P/E of 16.54 but the stock disappoints with meek earnings growth in near term with a forward P/E of just 1.97. This might be because of some near term headwinds but the stock is expected to grow well in coming years also having an attractive profit margin of 40.61% which can help it to gain market share. Looking at every aspect, investors definitely should pick NetEase as it has got much steam for growth in future.
